ECONOMY

Romania to get EU farm subsidy ultimatum soon

BRUSSELS (Reuters) – The European Commission is likely to recommend next week giving Romania one month to correct flaws in its agricultural payments system or start losing some farm subsidies, an EU source said on Friday. European Agriculture Commissioner Mariann Fischer Boel will report to the full European Union executive on Wednesday on audits of the farm payments agencies in both new member states which joined the bloc in January – Romania and Bulgaria. The sources said Romania’s situation was clearly worse than Bulgaria’s and Fischer Boel would seek a one-month deadline to remedy the deficiencies. A safeguard clause in the accession treaty with the Black Sea countries allows the EU to withhold up to 25 percent of direct payments to farmers on the Commission’s recommendation. The final decision rests with EU ministers who must decide by a qualified majority vote. Some west European politicians and lawmakers had argued that Bulgaria and Romania should wait longer to join the bloc because their administrative systems were too corrupt and incapable of handling billions of euros handed out in assistance schemes. The Commission criticised the newcomers in June for insufficient progress in fighting corruption and reforming their justice systems but decided they would face no sanctions at the time. In the run-up to their accession, both Balkan countries received numerous warnings from the Commission advising them of areas where they needed to make swift progress. For Romania to ensure that it had a proper accounting and monitoring system for spending the EU’s lavish agricultural handouts was a major problem for Brussels. All EU countries are supposed to use an electronic system called IACS (Integrated System for Control and Administration) to monitor the distribution of farm subsidies. Its functions include land registration, as well as other general audits. Romania, which has 22 million people, is due to receive EU aid worth -11.5 billion euros in 2007-09 and Bulgaria, with 8 million inhabitants, -4.6 billion euros.